Economic growth in Canada is set to tail off sharply after a robust first-quarter burst and could remain modest for years as momentum in exports fades in the face of a strong dollar, the Bank of Canada said Wednesday.
"It is an issue in terms of our trade performance and our competitiveness ... and an additional risk to the outlook to growth and inflation in Canada," Mark Carney, the central bank governor, told reporters after the release of bank's quarterly economic outlook.
The central bank revised upward its projection for first-quarter real GDP growth to 4.2% annualized, which is closer to private-sector estimates and nearly two percentage points above its previous forecast.
However, Carney said that was mostly due to some short-term factors.
Once its revision for the January-to-March period is built in, the central bank cut its estimates for economic expansion in six of the seven coming quarters through the end of 2012, as a number of factors kick in -- led by a slowdown in export growth. Annualized growth in the present April-to-June period, in fact, is expected to slow to 2% -- with disruptions to manufacturing operations due to the Japan earthquake expected to shave 0.5% from GDP.
